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What is QuickBooks & How Does Small Businesses Use QuickBooks

QuickBooks is the world’s most popular accounting software for small and medium-sized businesses. Find out everything you need to know about QuickBooks today in our What is QuickBooks guide.

Don’t use an online bookkeeping service yet? We recommend Intuit QuickBooks and they offer a free 30 day trial here.

QuickBooks is the premier accouting software used by thousands of businesses that offers a 30 day free trial and then its $15/mo which is cheaper than other payroll providers out there.

After reading this guide, you should have a thorough understanding of how QuickBooks works, how your small business can benefit from QuickBooks, and how businesses just like yours are leveraging the power of QuickBooks to enhance business efficiency.

So What is QuickBooks?

QuickBooks is a popular accounting software system for small and medium-sized businesses. It’s an ideal way to keep business finances organized and accurate – even if you have little to no knowledge about accounting.

In the past, QuickBooks came in the form of physical desktop software that you installed via CD-ROM. Today, QuickBooks is most often purchased as a cloud-based service. Businesses can access the software online using the web-based platform or download desktop clients.

What Does QuickBooks Do?

Some of the valuable tasks you can do with QuickBooks include:

  • Basic accounting
  • Invoicing
  • Reporting
  • Add-on services that let you handle inventory, payroll, and credit card processing, among other things

How Do Small Business Owners Use QuickBooks?

QuickBooks is the world’s most popular accounting software for small and medium-sized business owners. The software is easy to use, which makes it easy for business owners to navigate the software without needing any professional accounting training.

The software isn’t as fully-functional as hiring a full-time accountant. Nevertheless, it provides basic-level accounting that is sufficient for many small businesses.

At its most basic level, QuickBooks lets you easily track money coming in and out of your business. You can see how much money people owe you – and how much money you owe others. You can receive a visual breakdown of your small business’s financial picture with just a single glance.

This is useful for the day-to-day operation of your small business, but it’s also useful for tax time. Instead of scrambling to find old receipts and invoices during tax time, you can view a clear summary of your business’s financial picture simply by firing up QuickBooks.

During tax season, many small business owners simply give their accountant a read-only login to their QuickBooks account. This lets the accountant view, process, and submit QuickBooks data in preparation for tax season.

QuickBooks Lets You Create Invoices and Track Money Owned

For small businesses, invoice creation is one of the most popular services in QuickBooks. QuickBooks lets you quickly and easily produce a professional-looking invoice featuring your business’s logo and brand. You can produce multiple invoices for multiple clients that feature the same branding for your business.

When you create an invoice with QuickBooks, you get a report that lists everything you need to know about your outstanding invoices (i.e. the invoices you’ve previously created).

The software lists unpaid charges separated by the customer and job. You can double click a given invoice to get a detailed summary of that particular account’s activity.

Ultimately, this makes tracking the money owed to you by your customers (the “accounts receivable”) very easy.

Larger businesses also appreciate using QuickBooks to track the money they owe to their customers (the “accounts payable”).

QuickBooks Helps You Out During Tax Season

During tax season, QuickBooks will virtually pay for itself. QuickBooks can save an enormous amount of hassle during tax season for both you and your accountant.

QuickBooks has a feature called Tax Reports that organizes all of your tax information in an easy, readable way.

If you use an accountant, you can simply give your accountant a read-only login to your QuickBooks account. Then, they’ll take it from there and process all of the forms as they need to be processed.

QuickBooks is also easy if you do your own taxes. QuickBooks is compatible with popular tax filing software like TurboTax. All you need to do is transfer the information between programs with a few clicks. Then, you’ll barely need to enter any information into the form before submitting it to the government.

Obviously, the QuickBooks Tax Reports feature saves you a lot of time and effort. But it also helps you avoid costly mistakes.

QuickBooks Analysis and Report Options Make it Easy to View Business Statistics in Seconds

Want to get a visual representation of the health of your business? QuickBooks makes it easy to do that by providing you with dozens of business financial reports. The three most useful reports for most businesses are:

  • The Profit and Loss Report (your business’s income statement)
  • The Cash Flow Statement
  • The Balance Sheet

QuickBooks Profit and Loss Report (Income Statement)

The Profit and Loss Report is arguably the most important report in QuickBooks. It’s the report that tells you how much money your business has earned or lost over a set period of time.

Basically, this report explains…

  • All the money you have paid out over a set period of time
  • All the money you have earned (your income) over that same period of time

QuickBooks subtracts your expenses from your income to give you your net income from that period (either positive or negative).

QuickBooks lets you easily customize the period of time during which you’re tracking the profit and loss of your business. You can look at your net income week to week, for example, or break it down quarterly and annually.

QuickBooks Cash Flow Statement

Cash Flow is obviously an important part of any business. Many businesses have been successful and profitable – only to go out of business because they did not have adequate cash flow to pay bills when they were due.

To prevent this rookie mistake happening in your small business, use the QuickBooks Cash Flow reporting tool.

The Cash Flow statement looks similar to the Profit and Loss statement mentioned above. However, it’s only concerned with the amount of money going into and out of the business (and it does not factor in any other parts of your business).

Some of the key things you can see with the Cash Flow statement include:

  • Net income
  • “Adjustments to reconcile net income to net cash provided by operations” (credits and debits over the period)
  • Net cash provided by operating activities
  • Investing activities
  • Financing activities
  • Net cash increase for period
  • Cash at beginning/end of period

All of this information can be broken down into certain periods. QuickBooks will tell you the amount of cash you had at the beginning of the period and the amount of cash you have at the end of the period.

QuickBooks Balance Sheet Gives you a Comprehensive Summary of your Business’s Finances

If you want a comprehensive view of your company’s financial position, then the QuickBooks Balance Sheet is the best way to do that.

The QuickBooks balance sheet provides all of the following information at a glance:

Assets: Your business’s assets include all entities of real value. That includes physical objects (like inventory, real estate, office supplies, and cash) as well as intangible things (like a trademark, brand value, or a patent).

Liabilities: Liabilities include debts your business is legally-obligated to pay. Taxes, debts to vendors, and bank loans are included in this category.

Equity: When you subtract your assets and your liabilities, you get your equity. Your equity is any money you have invested in your business added to any earnings you have not yet withdrawn from your business. If your business has lost money over a certain period of time, then you would subtract losses your business has taken during that period from your equity. The best way to understand equity is that it’s the amount of your business that would be left over if you shut everything down today, sold off everything you owned, and paid all your debts.

Who Makes QuickBooks?

QuickBooks is made by a company called Intuit. That company was founded all the way back in 1993. Over the years, QuickBooks has grown from a small basement startup to the world’s largest accounting software for small and medium-sized businesses.

Today, Intuit Inc. is headquartered in Mountain View, California. The company reported total equity of $3.531 billion in 2013. The company is publically traded on NASDAQ and the S&P 500.

Intuit, Inc.’s address is:

2632 Marine Way

Mountain View, CA 94043

You can contact the company by phone at 650-944-6000. The company also maintains divisions around the world, including its small business division in Reno, Nevada, its customer contact center in Tucson, Arizona, and its corporate affairs center in Washington DC.

Intuit Inc. offices can also be found in five cities around the world: Edmonton, Alberta and Mississauga, Ontario in Canada; Bangalore in India; Singapore; and London, UK.

History of QuickBooks

QuickBooks was founded in 1993 by two engineers named Scott Cook and Tom Proulx. The two lived in Mountain View, California.

Prior to launching QuickBooks, the pair had had success creating accounting software called Quicken (which is still around today and remains very popular). Quicken was launched in 1983 and was catered primarily towards larger businesses.

Inspired by the success of Quicken, Cook and Proulx decided to launch a similar solution catered towards small business owners.

QuickBooks had one more advantage over Quicken: it used a double-entry accounting system. In 1994, Intuit purchased the right to use a double-entry accounting program called MoneyCounts. By integrating MoneyCounts with Quicken, QuickBooks was born.

Within 5 years, QuickBooks had claimed “up to 85% of the small business accounting software market.” The accounting software was exceptionally popular among small business owners who had no formal accounting training. These business owners appreciated the ability to minimize accounting costs while simplifying their business.

Over the years, Intuit, Inc. would release many more versions of QuickBooks. Subsequence releases sought to bridge the gap between professional accounting services and desktop-based software.

By 2000, Intuit had released two versions of QuickBooks, including the Basic and Pro versions of the software.

Then, in 2003, QuickBooks started branching into different industries and launched industry-specific versions of their software. These industry-specific versions featured workflow processes and reports designed for each of these business types. They also featured the unique terminology associated with different professions.

Some of the popular software versions included QuickBooks for:

  • Manufacturers
  • Wholesalers
  • Professional service firms
  • Non-profit organizations
  • Retailers
  • Contractors

Over the years, QuickBooks also branched into international markets. The Canadian and UK divisions of QuickBooks address region-specific accounting needs, including the UK’s VAT and Canada’s GST, HST, and PST sales tax.

What is QuickBooks Online?

Today, QuickBooks Online is Intuit’s future for QuickBooks. QuickBooks Online (QBO) is cloud-based accounting software that requires users to pay a monthly subscription fee instead of one upfront fee.

Users logon to the accounting software securely via their web browser, and then Intuit provides regular updates through the server. There’s no need to download patches for your software or upgrade to new accounting software every few years: as long as you pay the QBO subscription fee, you’ll receive constant access to QuickBooks accounting.

The cloud version of QuickBooks is accessible on virtually all internet-connected devices. You can access QuickBooks on Chrome, Firefox, Internet Explorer 10, Safari 6.1, Chrome for Android, and Safari for iOS.

There are also dedicated apps available for Android, BlackBerry, and iPhone. These apps let you view and edit QuickBooks data on-the-go.

Some of the QuickBooks Online subscription plans include:

Intuit QuickBooks Simple Start

  • $10 per month for the first 6 months ($13 per month after that)
  • Track income and expenses
  • Create estimates and invoices
  • Sync bank accounts and apps

Intuit QuickBooks Essentials

  • $18 per month for the first 6 months ($27 per month after that)
  • Track income and expenses
  • Create estimates and invoices
  • Sync bank accounts and apps
  • Manage and pay bills
  • Instant sales and profit reports

Intuit QuickBooks Plus

  • $24 per month for the first 6 months ($40 per month after that)
  • Track income and expenses
  • Create estimates and invoices
  • Sync bank accounts and apps
  • Manage and pay bills
  • Instant sales and profit reports
  • Track inventory
  • Prepare and print 1099s

All plans also come with a 30 day free trial. You get full access to QuickBooks Online during this free trial, although you’ll need to remember to cancel your subscription at the end of the trial if you are not interested in paying for a QuickBooks Online subscription (your card will automatically be charged after the trial).

Ultimately, QuickBooks maintains a massive market advantage in the world of small business accounting software. The software has millions of users all over the world and is estimated to have an 85% to 90% market share.

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